Heritage Financial Corp., parent company to Heritage Bank, is set to acquire Northwest Commercial Bank of Lakewood in a deal that ultimately could be valued at nearly $5 million.
Heritage has reached an agreement to pay $3 million, or $5.50 a share, for the bank. But if certain conditions are met, Northwest Commercial Bank shareholders could receive an additional $1.8 million, or $3.34 a share.
Northwest Commercial shareholders could receive more through an “earn-out structure,” in which the additional money would be paid if the bank successfully collects on some nonperforming loans, Heritage President and Chief Executive Brian Vance said Monday.
The acquisition is set to close in the fourth quarter so long as the deal receives shareholder approval and regulatory approval and Northwest Commercial repays about $2 million in TARP funds to the U.S. Treasury, he said.
Although Northwest Commercial shareholders could earn more if the bank collects on some problem loans, that doesn’t mean that Northwest Commercial is a troubled bank, Vance said, calling it a “very solid, commercial bank.”
Northwest Commercial made sense as an acquisition target because it is focused on business lending, has a branch in Lakewood and gets Heritage into Auburn, he said. Heritage has branches in Sumner and Kent but didn’t have one in Auburn, which presents potential lending opportunities to Boeing subcontractors in the area as well as warehouse-based operations tied to other trades, Vance said.
Heritage also plans to consolidate its Lakewood branch with the Northwest Commercial Bank branch in Lakewood, he said.
Northwest Commercial, formed in 2002, has an 18-person staff and $72.1 million in assets. President and Chief Executive Kurt Graff will help with the transition, Vance said, with plans to retire at the end of 2013.
This is Heritage’s third bank acquisition since 2010, beginning with Cowlitz Bank, followed by Pierce Commercial Bank and now Northwest Commercial Bank. Cowlitz and Pierce Commercial were considered troubled banks that were acquired with the assistance of the Federal Deposit Insurance Corp.firstname.lastname@example.org 360-754-5403 theolympian.com/bizblog @rolf_boone